How Does an Umbrella Insurance Policy Work?

Do Military Officers Need an Umbrella Policy?

If you're a military officer, should an umbrella policy be part of your financial plan? Based on my experience providing financial advice to military officers, most don't understand what umbrella insurance is. Let's start there. Umbrella insurance is one of those things that is built to give you “extra” protection for those just in case moments. It protects your assets over and beyond your current limits on casualty insurance policies. That means you have extra insurance coverage for your homeowners policy, auto insurance policy, and any other insurance policies you may have where you feel you may need additional coverage.

What Exactly Does Umbrella Insurance Cover?

At its most basic, umbrella insurance covers you if you or your property caused an injury (or worse) to someone else and they sue you. Here is an example...

As a homeowner, you may have someone visiting your home. If they slip and fall, you could be held liable for their injuries and any other damages sustained. An umbrella policy is extra assurance that their bills will be taken care of without you suffering a huge hit, if they sue you (and win) for more than the limits of your homeowners policy.

You may be wondering, what else could possibly be covered by this type of policy. Here are a few examples:

Property Damage

With an umbrella policy, any damage or loss to someone's property will be covered. That could mean your kid playing baseball and accidentally shattering someone’s window, to damage to a vehicle where you are the party at fault.

Bodily Injury

For example, if you have a dog and they bite someone, you’ll be thanking yourself that you have an umbrella insurance policy. As mentioned above, if you have guests over and they slip and fall on your property, those injuries will be covered under this type of policy.

Personal Liabilities

This type of insurance also comes in handy under other personal liabilities. If you are ever sued for slander or libel, or someone accuses you of malicious prosecution, if your policy is written to cover this liability it will cover your expenses. Although this type of policy is often ignored, discussing the possibility of having an umbrella policy in place to protect your interests with an agent can give you more information and peace of mind.

So...Do Military Officers Need an Umbrella Policy?

In general, I think an umbrella policy is a good idea for most military officers. By their nature, the events that umbrella policies cover are things that are unlikely to occur so insurance is a good way to transfer that risk.

You should especially consider adding this additional coverage to your policy if you are someone that has a lot going on, whether you entertain a lot, have a number of individuals over, have a business to run or have other situations that could put you in a position to compromise your investments if you are sued.

If you use your automobile a lot to transport things or are just on the road a lot, having an umbrella insurance policy to supplement your auto insurance policy could be just the thing you need. Or, if you transport a number of people from place to place, this would come in handy if you were to ever get in an accident and someone got hurt. If you are a parent that transports a lot of kids from place to place, this is a policy that should definitely be considered.

Understanding how an umbrella insurance policy can meet your needs will benefit you in the long run. It’s usually better to be safe than sorry.

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